With ERP established as a must-have in the market, BI and Analytics are now writing the next chapter of this category’s growth driven by a repository of structured and unstructured data across the enterprise. By Heena Jhingan
The Enterprise Application Software market was in flux during 2011. On one end, the market witnessed significant growth in the SMB segment, where ERP vendors came up with newer solutions and business models to address their requirements; on the other hand, mid-sized and large companies mostly focused on emerging technologies and paradigms such as Business Intelligence (BI), Analytics and mobility to derive more value from their existing IT infrastructure. Many enterprises were cautious about their investments, with some completely holding back onto their investment decisions. This was largely due to the tight liquidity position in the market.
According to Gartner’s estimates the market was dominated by market leaders SAP and Oracle. In all the big vendors have a hold on nearly 65% of the market.
IT is becoming the backbone for any organization to drive efficiency, growth and business outcomes. Efficient management of resources and processes is a must-have for business in this day and age.
The uncertainties in the business environments place greater emphasis on leveraging information systems for real-time visibility. Enhancing the productivity of employees and enabling them to respond in real-time to business challenges and needs is driving enterprises to adopt mobile enable business applications. There is a shift in business needs and the ways in which IT can support this. Users are looking for applications on premise, on device, on demand and through a hybrid delivery model so that they can respond much faster to customer demands, arising opportunities or unexpected events in real time.
On a slow track
Almost all large enterprises have an ERP system in place and are now looking at other avenues to gain more business benefits from their implementations. In the large and mid-sized segment of enterprises, ERP is a done deal. However, there is an increasing demand for ERP implementations in the SMB segment.
Earlier, enterprises followed a set pattern of deploying ERP, then CRM and then putting in the BI and analytics layer. That’s no longer the case as many SMBs simply want to deploy ERP and move to higher analytics applications.
Sunil Padmanbhan, Research Director, Gartner, said that, in the past the Indian offices of MNCs used to deploy the same kind of solutions as the parent company; however that is not the case anymore.
“We did see a number of large scale deployments of SAP solutions for MNCs who were implementing enterprise applications in order to enhance the effectiveness of their India operations. Localization of these solutions for meeting the laws in India was one big reason for the investment,” commented Debasish Pattanayak, Senior Vice President & Director, Collabera.
The availability of ERP on the Cloud is the best thing that could have happened. A large number of enterprises, particularly SMBs are looking at on demand, pay per use kind of solution.
Though slow, the ERP market in India is still growing, owing a number of the new projects. There are a large number of enterprises hunting for solutions for their specific requirements that include financial accounting, enterprise management and human capital management, which are not supported by their existing solutions. Besides, some of the enterprises are still not able to implement ERP due to legacy infrastructure.
Some players like Ramco are trying to bring innovation to this segment by bringing BI capabilities to ERP. “We are trying to use analytics as a part of ERP,” said Thamiza Nambi, Vice President – Business Consulting Group and Aviation Solutions, Ramco.
“In 2012, the ERP market might not grow in terms of numbers but we might see a movement of ERP as a managed service,” said Sunil Bhave, VP – Application Services, Fujitsu Consulting India.
According to analysts, the SCM solution market saw little innovation and the growth mainly was driven by adoption in the manufacturing industry. The other solutions like talent management and spend management saw deployments mainly as bundled solutions with ERP.
BI and the art of vertical engineering
Organizations that have already spent on ERP are now investing in Business Intelligence. In fact, BI is the next big wave. According to Gartner’s annual global CIO survey, BI ranked fifth on the list of the the top ten technology priorities in 2011.
“When an organization goes in for an ERP solution, the challenge typically lies in making available a stout tool, which the company can use to automate its business processes. Business intelligence comes in when an organization has attained the IT maturity to generate data and it faces the challenges of making sense out of the data and driving business decisions. Today most of the organizations have already deployed an ERP system. The next logical step is to deploy BI in order to tap into that rich pool of data sitting unexamined on ERP systems,” said Sanjay Mehta, CEO, MAIA Intelligence.
The overall BI market in India is at a nascent stage, with a huge untapped opportunity for vendors to capture. BI can improve decision making and operational efficiency, which in turn drives the top line and the bottom line.
Also, information generated from enterprise applications is at an all-time high and will continue to increase. BI platforms can turn that information into an asset on which better business decisions can be made. For an organization, gaining maximum benefit from an ERP solution requires a robust BI platform, in that context BI continues to be an important and relevant IT tool.
The key challenges impeding the BI adoption are cost and complexity, which restrict user adoption and deployment across the enterprise. Data migration and integration are other the most potent inhibiting factors for BI adoption. Other challenges could be departmental silos, data access, clean data, employee resistance, lack of business rules etc. Getting the data right in terms of data quality, one version of the truth and data governance is a fundamental requirement to BI adoption.
A bigger hindrance for the uptake of BI is the lack of skill sets. Many enterprises are unable to handle the change management to overcome cultural resistance. In the absence of an understanding of how to use BI within the organization and in the line of business, most enterprises do not encourage sharing information.
Another potential pitfall lies in some of BI tools themselves. Traditional BI tools are not scalable and user friendly. Traditional BI remains difficult to implement. In many cases, enterprises find it difficult to implement BI as customers have more than two different BI solutions across multiple different departments, none of which talk to each other.
The experts say that the key to getting accurate insights from BI is standard data. Data is the most fundamental component of any BI endeavor. The IT heads have to get company’s data stores and data warehouses in good working order before they can begin extracting and acting on insights. If not, they will be operating based on flawed information.
“The most challenging aspect of BI would be to understand the business processes well enough to determine how to improve them. IT heads need to be careful about the processes that they choose. If the process does not have a direct impact on revenue or the business isn’t behind standardizing the process across the company, the entire BI effort could disintegrate,” Mehta said.
IT heads need to understand all the activities that make up a particular business process, how information and data flow across various processes, how data is passed between business users and how people use it to execute their particular part of the process. They need to understand all this before they start a BI project, if they hope to enhance productivity.
“BI implementations fail mostly because they are sold to the IT departments and not to the business users. The use case and ROI need to be built with business users. If that is not done, it would result in high probability of shelf-ware, lack of ROI for the business user and a pure IT project that isn’t driven by the needs of the business,” Mehta reasoned.
Apart from that spreadsheet culture, data quality issues, over dependence on outsourcing, lack of BI strategy are some of the challenges that companies face during BI adoption.
Vertical-specific BI has proved a hit with verticals like BFSI, telecom, manufacturing, and pharmaceuticals that have been sitting on a huge repository of data, which they would like to do predictive analysis on. Nambi stressed that applications space was getting highly verticalized.
Bhave explained that the vendors were trying to focus on verticals on an individual basis and designed solutions accordingly and that this wasn’t the case for BI alone. Vertical CRM is a big trend. To avoid heavy customization in a horizontal solution, the vertical-specific CRM systems try to accommodate these differences through customization to fulfill individual needs. For example, there’s CRM software that specifically caters to the needs of the legal, financial, management and accounting sectors.
Then there’s BI visualization. Ian Bertram, Managing VP and Lead – Global Business Intelligence Research Team, Gartner, said that BI was not applicable to just text. It could involve photos, infographics, heat maps or any other sort of visual.
Gearing up for the Social Customer
CRM has become central to businesses over the past five years. The CRM application solution market in India saw good traction and is expected to contribute more to the overall applications market.
Suprakash Chaudhuri, Vice President, Business Solutions, Database & Technology, SAP India, said, “Consumers today are well informed and connected through mobile devices and social media, readily share opinions about products and services and they decide and act on information and opportunities in real time. Businesses and, in fact, entire value chains need to be equally collaborative, aware and agile.”
The customer as a concept is evolving and enterprises understand that they don’t buy products or solutions. Rather, they invest in service and experience.
“The relationship with the customer is now going beyond sales and marketing. Enterprises now want to have a 360 degree view of their customers and serve them better. These factors rolled into one are contributing to dramatic growth for solution providers’ CRM portfolios,” said Sunil Jose, Vice President, Applications, Oracle India.
Jose observed that a domain where Indian enterprises have had several foiled attempts is now beginning to see some results with CRM becoming more comprehensive and integrated to boot.
Bhave of Fujitsu said, “Analytical CRM is fast catching up in the CRM vertical. Relevant analytical capabilities are interwoven into applications for sales, marketing, and service. Marketing applications generally come with predictive analytics to improve segmentation and targeting and features for measuring the effectiveness of online, offline, and search marketing campaigns. Enterprises, the large ones in particular, function with collaboration between various departments within the organization. Marketing, service and sales are now considered as related entities and adopt an integrated approach to CRM.”
He added that vendors catering to an organization had long felt left out of the whole CRM picture. In order to cement stronger ties with vendors, the relationship management offering is now being extended to vendors as well. It will be interesting to see that in future whether VRM will be an integrated part of CRM or it it will evolve as a new category.
Also, a new trend to be on the lookout for is the emergence of the class of social consumers.
“This shift which refer to use of social media platforms such as Twitter, Facebook and LinkedIn is largely to empower customers to make purchase decisions that are informed by other parties sometimes outside of the control of the seller or seller’s network. Soon CRM solutions will include user communities, podcasting, and personalization in addition to internally generated marketing and online advertising as well, explained Doug Erickson, Vice President-APAC, SugarCRM.
Preconfigured and simplified
The enterprise application scenario is evolving and is witnessing convergence and pre-packaging.
Jaskiran Bhatia, Country Manager, Information Management Software Group, IBM India/ South Asia, observed that earlier every organization wanted to buy mission-critical applications first and planned its infrastructural software accordingly. “Now however, organizations want to do things like CRM, BI and data warehousing all at once since they have realized that these solutions complement each other, she said.
Pattanayak of Collabera pointed that due to SMB budgetary constraints, the implementation partners had to make investments in creating industry-specific templates, which would, in turn, bring down the overall cost of implementation. “There is a need for more pre-configured solutions so that the overall implementation time lines come down,” he added.
Elaborating on the needs for pre-configured solutions, Srikanth Karnakota, Director – Server and Cloud Business, Microsoft India, said, “Until some years back, the borders between BI, DW and analytics were well defined. Therefore, these solutions were sold separately. This would end up making a complete solution expensive and hard to implement These have today metamorphosed into a larger entity such as Microsoft SQL Server which provides an integrated single suite at a low cost bringing all of these capabilities together.”
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Mobile and in-Memory
Enterprises want to connect with their employees and customers on the move. The ability to work anywhere anytime is a defining feature of modern business. Enterprise mobility fundamentally changing how people work. Application solution providers are working on mobility standards and comprehensive mobility platforms.
“Customers in India, particularly SMBs, are adopting mobility solutions to send information and applications to any device, anytime, anywhere making mobility the ‘new reality’ and the ‘new desktop’,” elaborated SAP’s Chaudhuri.
He also said that the in-memory database management systems were being heralded as a transformational technology, potentially able to change business processes and the way that the market thinks about and designs databases as well as the infrastructure necessary to support them.
The Software-as-a-Service (SaaS) user base in the Indian enterprise segment is growing at a fast pace. SaaS enjoys good awareness and is beginning to nibble into the on-premise applications market. Manufacturers have embraced SaaS-based CRM and HR management (HRM) solutions to a greater degree than SaaS-based ERP solutions. Retailers are inclined to adopt SaaS-based SCM and CRM solutions, while telecom service providers are expected to adopt SaaS-based billing and payment solutions. In the years ahead, the market is likely to see this model picking pace.
Gartner’s Padmanbhan pointed to a gradual, yet significant change that though the applications market was dominated by mega vendors, smaller players like Ramco and Talisma were gaining ground due to their vertical focused and localization approach.
Global aspirations of Indian companies are among the factors propelling investments of the Indian corporate sector. As enterprises go global and move to multi-location and geographically dispersed operations, the need to leverage technology to manage these diverse operations, have business visibility and comply with different regulatory requirements has grown. Going forward, sustainability along with governance, risk management and compliance solutions are likely to be high in demand.
